US congressmen for New York and Chairman of the House Judiciary Committee Jerry Nadler signaled on Thursday that he and his colleagues intend to scrutinize the recently announced $69 billion USD acquisition of Activision-Blizzard-King by tech giant Microsoft, under anti-trust laws designed to prevent anti-competitive behaviors. Similar action is also expected from the EU, which has shown a propensity for anti-trust action against huge tech mergers over the last decade.

"Activision Blizzard — already a gaming giant — has a pattern of bullying workers to evade accountability for rampant sexual misconduct," Nadler stated, linking to a Dot Esports article about Microsoft's work culture. "I expect this deal to be closely scrutinized to ensure that it won't harm American workers or competition."

In his Tweet, Nadler discusses both sexual misconduct and separate competition issues. ABK is already facing a massive gender discrimination case of its own, that many speculate led to their sale to Microsoft after share prices for ABK plummeted in the wake of that scandal. But now it is possible that the US and other governments could attempt to block the purchase of ABK under anti-trust statutes.

Microsoft faces calls for anti-trust scrutiny following ABK deal

Nadler is not the only current or former official to signal possible DOJ and FTC action against the historic 69 billion dollar deal. Former Justice Department antitrust chief Makan Delrahim said in comments to the Wall Street Journal: “Recent actions by the antitrust agencies in the U.S., but also recent, unprecedented aggressive actions abroad, including in EU and the U.K., probably suggest the agencies will take a close look at the transaction.”

These suspicions were further bolstered by the agency announcing this week that it "launched a joint public inquiry aimed at strengthening enforcement against illegal mergers. Recent evidence indicates that many industries across the economy are becoming more concentrated and less competitive – imperiling choice and economic gains for consumers, workers, entrepreneurs, and small businesses."

"The antitrust laws charge the FTC and the Justice Department with preventing mergers that may substantially lessen competition or tend to create a monopoly," the FTC explained. "Merger guidelines are frameworks for the analysis of mergers under the antitrust laws. [...] The public inquiry launched today seeks comments on developments in the modern economy and new evidence of mergers’ effects on competition to inform potential revisions to the guidelines."

Various consumer advocates also immediately sounded the alarm when Microsoft announced its deal earlier this week.

Notably, Alex Harman of Public Citizen said: "Once again, Microsoft, one of the biggest of the Big Tech companies, is shamelessly gobbling up a competitor to try to strengthen its market position. No way should the Federal Trade Commission and the U.S. Department of Justice permit this merger to proceed. If Microsoft wants to bet on the ‘metaverse,’ it should invest in new technology, not swallow up a competitor. Bipartisan legislation pending in the U.S. House and U.S. Senate would prevent exactly this type of merger and should be passed urgently.”

Phil Spencer argues Microsoft's ABK purchase is not anti-competitive

Microsoft Gaming CEO Phil Spencer rejected the calls for anti-trust action against Microsoft in an interview with CNBC this week.

He argued that phones are still the dominant portion of the gaming market and that the games industry is very competitive, despite Microsoft having bought up Minecraft, Bethesda, and ABK in the past several years.

“There is an incredibly competitive market in the gaming industry," Spencer told CNBC. "The truth is that the most popular gaming platforms on the planet are mobile devices, distribution on that content, and control over those devices. So look at a company like Microsoft, we’re merging content and intellectual property to compensate for the lack of a mobile distribution capability. This is our opportunity to fight and compete on the most popular gaming platform, mobile."

He also pointed out that there are other large publishers like EA, Sony, Tencent, and others, claiming that this is evidence that Microsoft buying up several of the largest studios and publishers in the world is not anti-competitive.

The United States has taken antitrust action against Microsoft in the past. In 2001 in the United States v. Microsoft Corporation, the US claimed that Microsoft illegally maintained a monopolistic position by preventing users from uninstalling Internet Explorer, during the "browser wars" of the early 2000s. Ultimately the courts found that Microsoft had violated the Sherman Antitrust Act of 1890 and the DOJ reached a settlement in that case with Microsoft.

The United States has a host of anti-trust laws on the books that are meant to govern large acquisitions in the marketplace, in order to prevent monopolistic and duopolistic activity. While these have been rarely enforced in recent years, even as some of the biggest tech mergers in history have occurred, the current congress has taken a somewhat renewed interest in enforcing these laws. Recently, they have been scrutinizing Meta, owner of Facebook, for its domination in the social media space, owning Facebook, WhatsApp, and Instagram.

If there is an anti-trust action against the deal, we can expect it to be announced in the coming months, even as Xbox moves forward with its purchase of ABK.